Dropbox is navigating significant challenges with its core FSS business and has undertaken a major workforce reduction. However, the introduction of Dropbox Dash for Business and strong financial metrics such as revenue growth and free cash flow signal potential for future growth. While there are headwinds, strategic realignments indicate an attempt to position for future success.

Company Guidance

During the Dropbox Q3 2024 earnings call, the company provided various metrics and guidance reflecting its strategic shifts and financial performance. The revenue for Q3 was reported at $639 million, a 0.9% increase year-over-year, with total ARR reaching $2.579 billion, up 2.1% year-over-year. The company announced a significant 20% workforce reduction to better align resources with growth opportunities like Dropbox Dash, an AI-powered search product. Despite these changes, Dropbox maintained a stable gross margin of 84% and an operating margin of 36.2%, slightly ahead of guidance. The company also generated a free cash flow of $270 million, a 20% year-over-year increase. Looking ahead, Dropbox anticipates Q4 revenue between $637 million and $640 million, with a full-year revenue projection for 2024 in the range of $2.542 billion to $2.545 billion. The non-GAAP operating margin is expected to remain around 36%, while free cash flow projections have been adjusted to $860 million to $875 million due to severance costs. For 2025, Dropbox anticipates flat constant currency revenue growth, with potential operating margin expansion of approximately 150 basis points, driven by strategic investments in AI and product development, despite a challenging market environment.

Introduction of Dropbox Dash for Business

Dropbox launched Dash for Business in October 2024, an AI-powered universal search product aimed at addressing fragmented content management and governance needs. Initial feedback has been positive, especially from IT leaders.

Financial Performance

Dropbox reported a Q3 2024 total revenue increase of 0.9% year-over-year to $639 million and an ARR growth of 2.1% year-over-year to $2.579 billion. Non-GAAP operating margin was 36.2%, ahead of guidance, with a net income of $190 million.

Strong Free Cash Flow

Free cash flow for Q3 2024 was $270 million, a 20% year-over-year increase, with a free cash flow per share of $0.85.

High Gross Margin

Gross margin for Q3 2024 was 84%, benefiting from an increase in the useful life of servers.

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Dropbox (DBX) Earnings, Revenues Date & History

The upcoming earnings date is based on a company’s previous reporting, and may be updated when the actual date is announced

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DBX Earnings History

Report Date	Fiscal Quarter	Forecast / EPS	Last Year's EPS	EPS YoY Change	Slides	Play Transcript
Feb 13, 2025	2024 (Q4)	0.62 / -	0.5	―	―	―
Nov 07, 2024	2024 (Q3)	0.53 / 0.60	0.56	7.14% (+0.04)
Aug 08, 2024	2024 (Q2)	0.52 / 0.60	0.51	17.65% (+0.09)
May 09, 2024	2024 (Q1)	0.50 / 0.58	0.42	38.10% (+0.16)
Feb 15, 2024	2023 (Q4)	0.48 / 0.50	0.4	25.00% (+0.10)
Nov 02, 2023	2023 (Q3)	0.49 / 0.56	0.43	30.23% (+0.13)
Aug 03, 2023	2023 (Q2)	0.46 / 0.51	0.38	34.21% (+0.13)
May 04, 2023	2023 (Q1)	0.37 / 0.42	0.38	10.53% (+0.04)
Feb 16, 2023	2022 (Q4)	0.39 / 0.40	0.41	-2.44% (>-0.01)
Nov 03, 2022	2022 (Q3)	0.38 / 0.43	0.37	16.22% (+0.06)

The table shows recent earnings report dates and whether the forecast was beat or missed. See the change in forecast and EPS from the previous year.

Beat

Missed

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DBX Earnings-Related Price Changes

Report Date	Price 1 Day Before	Price 1 Day After	Percentage Change
Nov 07, 2024	$27.88	$27.04	-3.01%
Aug 08, 2024	$21.73	$22.44	+3.27%
May 09, 2024	$23.14	$23.13	-0.04%
Feb 15, 2024	$32.54	$25.08	-22.93%

Earnings announcements can affect a stock’s price. This table shows the stock's price the day before and the day after recent earnings reports, including the percentage change.

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